Which blockchain is the most decentralized? Expert response
Mance is the co-founder and CEO of Hedera Hashgraph, a next-generation distributed ledger technology that claims to have higher speeds and security guarantees than existing blockchain solutions.
âWhen we talk about decentralization, I think it’s very important to be specific about what we mean. When we talk about Layer 1 protocols, what is precisely measured when the We talk about decentralization Two distinct categories of decentralization are important: 1) governance and 2) scheduling of transactions.
First, governance: How many different entities (people or organizations) are involved in making decisions about product roadmap, pricing of services, payment of rewards, and other governance-related decisions? Are these entities all known by name or can they be anonymous? While they can be anonymous, there is no way to really determine how decentralized governance is, as the same anonymous actor can pretend to be several different entities. Is there an opportunity to consolidate voting rights? For example, if the voting rights are associated with a governance token, then a single actor can increase their influence by purchasing or earning additional tokens, which leads to the consolidation of rights and increased centralization.
The Hedera Board of Directors model is exceptional among public books. It consists of up to 39 time-limited organizations, chosen to represent a wide range of industries, with member headquarters worldwide, running nodes on six different continents. Board members are all made public, minutes of board meetings are posted (and hashed on Hedera using the Hedera Consensus Service (HCS)), and each member has only one vote to ensure l equity, stability and truly decentralized decision-making. Even the LLC Member Agreement that companies must sign to join the board is public and hashed on HCS. This model contrasts sharply with protocols which are governed by a small group of core developers or a single foundation.
Then, the decentralization of the order of transactions: what is the minimum number of entities necessary to dictate the order of transactions in the network? For example, with Bitcoin, only a handful of mining organizations (often five or less) control more than 50% of the network’s hash power, which is enough to dictate the order of transactions. (As of this writing, only three mining pools control 47% of Bitcoin’s hash power, and only two mining pools control nearly 48% of Ethereum’s hash power). Additionally, if a network allows anonymous node operators, then it is impossible to know to what extent a given entity controls the hash power of the network.
Phase 1 of the Hedera network requires more than two-thirds of its board members to agree on the order of transactions, and each board member currently has equal weight in their vote. Because each board member is publicly known by name, we can say with certainty that the order of transactions is decentralized. It’s already more decentralized than Bitcoin and Ethereum. Phase 2 will add publicly identifiable community nodes, and only after there is a very high degree of certainty that consolidation of participation is unlikely will anonymous nodes be added to the network.
The Hedera network, both in its governance model and in the technical scheduling of transactions, was designed from the start to embody the ideals of sustainable decentralization.